French local property tax

Landlords, usufructuaries, or fiduciaries of constructed buildings are subject to the tax on land with buildings.

How is it calculated?

The tax on land with buildings is determined in the local municipality (« commune ») where the property is located.
It is established for a whole year according to the situation on 1st January of the taxation year.
Thus, as a property owner on 1st January, you have to pay the property tax for a whole year, even if you sell your property afterwards.
If you have carried out improvements works to your property (subsequently increasing its rental value) during the course of the year, these will be taken into account only on 1st January of the following year.

Tax base

The tax base is dertermined by the cadastral income.
It is equal to cadastral rental value lowered by a 50% deduction so to take administration, insurance, depreciation, maintenance and repair costs into account.
The cadastral rental value is assessed by the land registry office according to a theoretical annual rent that the landlord could derive from the property if it was rented.

As for the standard deduction, it allows taking administration, insurance, depreciation, maintenance and repair costs into account.

Rates

French territorial communities vote on the rates that are applied according to the tax base. The French territorial communities are the municipalities,the EPCI (The « Etablissement Public de Coopération Intercommunale » is a public structure dedicated to the cooperation between municipalities), and the French administrative departments and regions.

Property Tax is paid once a year by the property owner.

Social contributions

They represent 12.1% of the annual net income and include: ?
- CSG at a rate of 8.2%.?- CRDS at a rate of 0.5%.?
- Social contribution at a rate of 2%.?
- Additionnal contribution at a rate of 0.3%.
- RSA at a rate of 1.1%.

French local business tax

This tax is levied once the rental, even seasonal, becomes regular.
Lessors renting furnished properties are subject to the local business tax (furnished rentals are considered as a commercial activity), except for rentals being part of his/her primary residence.
The tax is assessed according to the rental value indicated on the real property tax return. Rates are established by French territorial communities. Landlords may request an upper limit on the tax calculated according to the added value (their profit and loss account).

Useful information: Certain municipalities do not collect this tax.

French local residence tax

The local residence tax is payable for any property occupied as of January 1st. It is calculated according to the size, modern conveniences and geographical location of the property. Tax rates are assessed annually by local authorities.
In the case of a seasonal furnished rental, the jurisprudence in line with a decree made at the end of 2007 stipulates that the lessor/landlord is liable for the local residence tax from the moment that s/he occupies the property as primary or secondary residence outside rental periods. Thus, it does not matter if the property is rented as of January 1st.

On the other hand, if the lessor/landlord mandates a property manager to manage year-round a property rented on a seasonal basis, then s/he is not liable for the local residence tax. According to the jurisprudence, when the lessor/landlord gives a mandate, s/he does not reserve the possibility of occupying the residence.
When the lessor/landlord pays the local business tax, s/he is not liable for the local residence tax.
His/her lessee on January 1st is liable for the local residence tax. However, if s/he fails to pay, there is a solidarity obligation on landlord's part.

 Attention! If the landlord reserves the possibility to occupy the residence for part of the year, s/he will be liable for the local business tax and the local residence tax.

VAT – Furnished rentals used as residence are not subject to VAT.  However, as of 1st January 2003, furnished rentals which provide three of the four below hotel-like services are subject to VAT, even though the tenancy manager is not registered at the French Registry of Trade and Companies.
    Breakfast.
    Daily house-cleaning.
    Household linen replacement during the whole stay.
    Customer reception.

French empty housing tax  –
As of 1st January 1999, an annual tax is levied on unoccupied housing in municipalities with a population of over 200 000 inhabitants including suburb areas.
The tax is payable on dwellings, apartments, or houses that have been empty for at least two consecutive years. However, if the property has been rented during 30 consecutive days within the two-year period, it will not be taxable.
« Empty housing means unfurnished housing, and it consequently means not subject to local residence tax [...]. So, second homes are specifically excluded from the scope of the empty housing tax » . (annotation from the fiscal instruction dated on 5th March 1999).
Useful information: the tax does not apply if the property is empty due to circumstances beyond the owner's control. This is the case for properties doomed to disappear or to undergo works related to town-planning, rehabilitation, or demolition projects. This is also the case for properties put up for rent or sale for which no tenant or buyer is found despite market prices application. This is the reason why it is important to keep proof of selling and renting attempts.

The tax is given in percentage and assessed on the basis of the gross rental value of the property, applying the same principle as for the local residence tax. The rate varies according to how long it has been empty:
    10% the first year the property becomes taxable.
    12.5% the second year.
    15% in each of the following years.
On top of this 9% is added for administrative expenses.
Useful information!
A temporary abatement has been introduced to encourage landlords to rent back their properties. It represents 30% and to benefit from it the following condition shall be met:
If you rented back your property in 2007 and paid for it the French empty housing tax in 2006, then you will benefit from a specific deduction of 30% on the rents of 2007, 2008, and 2009.

Attention! The 30% specific deduction can not be combined with other schemes to encourage rental investment, such as deductions for depreciation (the « Robien Recentré » scheme, « Borloo Populaire » scheme, etc.).

French tourist tax

In certain French municipalities (resort, seaside or thermal towns), the tourist tax is introduced through deliberation of town council. It concerns all persons not living in the municipality and not eligible for the local residence tax. The tax is applied in two different ways:

- The « au réel » tourist tax: meaning it is paid per tourist. As of 1st January 2003, it varies from 0.2 to 1.50 euros per person and per night.
Useful information: children under thirteen, persons exclusively accompanying diseased people, disabled persons, wounded and disabled war veterans are exempted from the French tourist tax. Workers participating in the operation and development of the resort are also exempted.
When the tourist tax is applied, the local residence tax is not applied.

- The property owner is liable for the fixed tourist tax.
It is established at the beginning of the tourist season and takes into account the opening period. Businesses that have been runned for less than two years are exempted from the fixed tourist tax.